General

The Fund promotes the environmental characteristics of greenhouse gas emission reduction, carbon dioxide emission reduction and increased use of renewable energy. The Fund promotes environmental or social characteristics without having sustainable investment as an objective.

The Fund’s investment strategy and its sustainability criteria are described below:

ESG screening

The Company has purchased an ESG screening tool Global Standards Screening through Morningstar / Sustainalytics. The screening tool is a standard based tool that evaluates the extent to which potential portfolio companies cause, contribute to or are attributable to violations of international norms and standards.

ESG analysis

Prior to each investment, the fund company conducts an analysis of the portfolio company based on specific sustainability aspects. The fund company examines the sustainability reporting published by the portfolio company, carbon emissions, the possible involvement of the portfolio company’s products in sectors that the fund company excludes (see below on exclusion criteria) and the possible contribution of the portfolio company to one or more of the 17 UN Sustainable Development Goals (SDGs).

Exclusion criteria

The Fund Company has established certain exclusion criteria which the Fund applies. The Fund Company has excluded investments in industries and sectors in which the Fund Company does not see long-term sustainability or social benefit. The Fund excludes companies involved in coal power, fossil fuels, tobacco, alcohol, commercial gambling, pornography, weapons, cannabis or animal testing.

Selection

The Fund has established a framework of criteria for a portfolio company to be classified as a “promoted company”. These companies are actively selected into the Fund as they contribute to the environmental characteristics the Fund intends to promote. The Fund Company’s framework for promoter companies is set out in section 4 “Investment Strategy”.

Sustainability criteria during investment

During investment in the portfolio company, the fund company receives information through Morningstar / Sustainalytics with ongoing alerts regarding ESG-related incidents in the portfolio companies.

The fund company has decided that investments placed on the Morningstar / Sustainalytics Watchlist should be further reviewed and considered for divestment within six months if the portfolio company has not changed its outlook to positive within the period or if new information has emerged from contact with the portfolio company. Portfolio companies that have become non-compliant should be reviewed further and considered for divestment within three months unless action has been taken or new information has become available.

Monitoring

The Fund Company monitors the promotion characteristics that the Fund intends to promote through the Fund Company’s Investment Council and the meetings held by the Council. In addition, compliance with the sustainability information provided for the Fund will be monitored by the Fund’s second and third line of defense control functions; risk management function, regulatory compliance function and internal audit function.

Methodology and due diligence

The fund company measures the promotion of the environmental attributes promoted by the fund at the fund level by collecting data on certain sustainability indicators including greenhouse gas emissions and carbon footprint. In addition, the fund management company measures the achievement of the promotion characteristics at the individual level of the fund’s promotion companies by reviewing the sustainability reporting and in particular the climate-related key performance indicators provided by the portfolio companies.

Data

The Fund purchases data from the external third party provider Morningstar / Sustainalytics which is incorporated into the Fund’s ESG analysis prior to investment but also during the period of investment to measure the achievement of the promotion characteristics as well as to perform ongoing monitoring of the portfolio companies.

The fund company considers that there are some limitations regarding the sustainability data collected given the lack of available sustainability data. The Fund has taken best effort measures to obtain reliable and qualitative sustainability data by using a trusted third party sustainability data provider and where Morningstar / Sustainalytics has been unable to provide the data, the Fund has approached the portfolio companies directly to request it.

Shareholder engagement strategies

Due to the size of the fund company, it has been decided that the fund company will not influence the portfolio companies by voting at shareholder meetings. Instead, the fund company conducts advocacy by sending annual letters to the portfolio companies expressing its position on any sustainability-related issues and also questioning any incidents that have been detected through the screening tool used by the fund company.